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To: vestor who wrote (6304)	12/3/1999 10:50:00 PM
From: Gary Korn	Respond to of 10027

Rule 390 impact I spoke to a NITE and a TRIMARK person today (both were in the same office, as it happened) and got the skinny on the impact of the termination of Rule 390. Here goes: 1. For purposes of Rule 390, there are two type of stocks on the NYSE. Those that were listed on the exchange before 1979 (like IBM) and those that were listed on or after 1979 (like JBL). 2. About 27% of stocks, representing about 45% of NYSE volume, are pre-1979 listed stocks. 3. There is a thing known as the Consolidated Quote System ("CQS"). The CQS will show third-market (non-NYSE based) quotes for all stocks, like say IBM. However, the specialists on the NYSE, while they see CQS quotes (perhaps NITE is showing a 112 ASK on IBM), don't need to fill orders for pre-1979 listed stocks at the best CQS price, nor need they route the orders to such market maker. In fact, they generally don't. 4. There is also a thing known as the Intermarket Trading System ("ITS"). All post-1979 NYSE stocks are what is known as "ITS Eligible." This means that, when a specialist on the NYSE looks at his CQS screen and sees a better price on IBM available from a third-market participant, such as NITE, the specialist must either fill the order at that price or route it to the participant with the best price. 5. Pre-1979 NYSE stocks are not now ITS Eligible. Hence, orders need not be routed to a third-market player (like NITE) who might show a better price on CQS. 6. The cancellation of Rule 390 means that pre-1979 stocks can now become ITS eligible. This has not happened yet. 7. Within about two weeks or so, the ITS Commission will meet. In all likelihood, it will, with the removal of Rule 390, vote and require that all pre-1979 NYSE listed stocks be ITS eligible. Upon this vote, it will be a requirement that orders for both pre-1979 and post-1979 stocks be filled at the best CQS price or routed to the market participant showing such price. 8. Once the ITS Commission votes, and once pre-1979 stocks are required to be filled at the best CQS price, then the 27% of listed stocks that are not currently ITS eligible, which represent 45% of NYSE volume, will become available to NITE (and to all third-market market makers) for order execution. Gary Korn

To: vestor who wrote (6304)	12/3/1999 11:23:00 PM
From: Gary Korn	Read Replies (1) \| Respond to of 10027

NITE 10Q Volume vs. AutEx Volume A poster on the Raging Bull thread, pthah, has correctly noted that the quarterly AutEx numbers are always below the numbers reported by NITE in its quarterly 10Q. See the following table: Qtr 10Q reptd vol. AutEx vol. Difference % 1Q99 15,943,000,000 13,473,269,000 2,470,000,000 15.5% 2Q99 21,320,000,000 17,661,503,000 3,658,497,000 17.2% 3Q99 17,801,000,000 14,922,288,000 2,878,712,000 16.2% The reasons for this difference is that AutEx imposes limits on the types of trades that market participants (like NITE) can report to it: 1. Trades in pink sheet stocks generally are not reported to AutEx. This makes up a good amount of NITE's volume, however. 2. Trades in certain foreign stocks/ADRs are not reported. 3. Small trades (below certain minimums) are not reported to AutEx. I have the AutEx guidelines on this, but I question whether AutEx sent me the correct guidelines (for these suggest that trades below 5,000 shares are not reported to it). 4. I also spoke to a NITE person on this. He confirmed that the AutEx data excludes up to 20% of the shares that NITE actually processes. In sum, what this all means is that NITE generally handles up to 20% more shares than reported by AutEx. So, we are in fact doing better than we thought we were doing. Gary Korn

To: vestor who wrote (6304)	12/4/1999 12:46:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 10027

Here are CORRECTED daily NASD/OTC volumes for NITE (from AutEx), and averages for each week. Day Volume % Average for Week 10/01 156,266,000 13.5 x 10/04 146,968,000 13.9 x 10/05 181,085,000 13.3 x 10/06 193,719,000 14.4 x 10/07 192,368,000 13.9 x 10/08 162,138,000 14.0 x 172,090,000 10/11 159,814,000 15.5 x 10/12 174,977,000 15.1 x 10/13 167,580,000 14.3 x 10/14 169,858,000 14.5 x 10/15 186,049,000 15.7 x 171,656,000 10/18 157,493,000 14.0 x 10/19 172,951,000 14.0 x 10/20 171,235,000 14.1 x 10/21 213,002,000 15.8 x 10/22 206,887,000 15.9 x 184,313,000 10/25 187,252,000 16.7 x 10/26 187,741,000 15.4 x 10/27 190,378,000 15.3 x 10/28 208,814,000 14.6 x 10/29 208,812,000 13.3 x 196,599,000 11/01 236,851,000 18.1 11/02 255,758,000 17.1 11/03 247,742,000 15.7 11/04 267,696,000 16.7 11/05 284,879,000 17.7 258,585,000 11/08 247,107,000 16.3 11/09 278,975,000 16.3 11/10 291,688,000 16.9 11/11 332,329,000 19.7 11/12 305,101,000 18.2 291,040,000 11/15 351,099,000 22.7 11/16 312,041,000 18.0 11/17 343,675,000 17.7 11/18 423,031,000 20.8 11/19 418,590,000 22.9 369,687,000 11/22 367,738,000 23.0 11/23 310,907,000 18.7 11/24 266,224,000 18.0 11/25 Markets Closed 11/26 228,411,000 24.6 293,320,000 11/29 334,536,000 19.8 11/30 335,783,000 18.1 12/01 361,873,000 20.6 12/02 311,224,000 20.2 *12/03 335,216,000 20.1 335,726,000** Gary Korn * Preliminary data x Any number followed by an "x" is still to be corrected for the "getting data too soon" problem.